AFC reports net income increased from $9.3M or $0.11 per share in 3Q03 to $17.3M or $0.19 per share

October 26, 2004

3 Min Read

PETALUMA, Calif. -- AFC® (Nasdaq: AFCI - News), The Acronym for Access(SM), today reported financial results for the third quarter ended September 30, 2004.

Revenues for the third quarter of 2004 were $119.6 million on a generally accepted accounting principles (GAAP) basis, as compared with $85.2 million for the same period last year, an increase of 40%. GAAP net income for the third quarter of 2004 was $17.3 million, or $0.19 per share, compared with $9.3 million, or $0.11 per share, for the same period last year. Revenues for the first nine months of 2004 were $331 million compared with $248.7 million for the same period last year, an increase of 33%. Net income for the first nine months of 2004 was $15.6 million, or $0.17 per share, compared with $21.0 million, or $0.24 per share, for the same period last year.

Core business net income, which excludes certain items, was $5.9 million, or $0.07 per share, for the third quarter of 2004, compared with $9.6 million, or $0.11 per share, for the same period last year. Core business net income for the first nine months of 2004 was $19.7 million, or $0.22 per share, compared with $25.4 million, or $0.29 per share, for the same period last year.

Reconciliations between GAAP and core business results are provided immediately following the condensed consolidated statements of cash flows. These core business measures are not in accordance with, or alternatives to GAAP, and may be different from measures used by other companies. We believe core business results help investors better understand the financial performance of our core business. We also believe core business results provide a more consistent and useful basis for comparison between periods and for making projections. AFC management primarily uses core business results for budgeting purposes, reviewing business performance and making investment decisions.

Cash provided by operations was $5.1 million in the third quarter of 2004, compared to cash used in operations of $45.9 million in the third quarter of 2003.

"Although our revenue was slightly below our previous guidance, we exceeded our operating profit goals in a challenging spending environment," said John Schofield, chairman, president and chief executive officer at AFC. "The third quarter was characterized by record DSL shipments, growth in FTTP sales to both large and small carriers, and the launch of several new initiatives designed to strengthen our efforts in the IOC market.

"For the past year, our strategy has been to extend AFC's reach in the RBOC market, and in the third quarter, we saw for the first time, more than half of our revenues derived from these large carriers. We are encouraged by this progress with the RBOCs, especially as it is coupled with AFC's expanded focus on the IOC market. We are seeing a high level of interest from small carriers for our FiberDirect(SM) solution and our newly introduced ADSL2+ card. In the future, we are confident that as carriers of all sizes upgrade their access networks, they will continue to look to AFC solutions to meet their most advanced fiber access needs."

Advanced Fibre Communications Inc. (AFC)

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